NSPS

2011 was a busy year for those attempting to stay abreast of air quality issues affecting the oil and gas industry in Pennsylvania. In recent presentations to the PA Chamber of Business and Industry and the Marcellus Shale Coalition, Joyce Epps, PADEP’s Director of Air Quality, discussed PADEP’s intent to require natural gas facility owner/operators to submit an atmospheric emission inventory data by March 1, 2012. This is just the latest in a series of state and federal air quality compliance issues that have been pertinent to the oil and gas industry. As 2012 gets underway, expect to hear more about emission inventories, general permits, plan approval exemptions, source aggregation, NSPS/NESHAPS, and greenhouse gas reporting. If your head is spinning, here is an update on some key air topics:

1) PADEP Atmospheric Emission Inventories

PADEP is rolling out its first emissions inventory program for the natural gas industry. Initial indications are that it will be modeled after the Wyoming Department of Environmental Quality approach. PADEP sent initial notification letters to 99 operators on 12/6/11 with the intent that 2011 inventories be submitted by 3/1/12. Criteria pollutants (e.g., carbon monoxide and nitrogen dioxide) and hazardous air pollutants (e.g., benzene and formaldehyde) from point sources (e.g., dehydrators and heaters), fugitive or area sources (e.g., leaking components and impoundments), and mobile sources (e.g., on- and off-road engines) are expected to be included. An Excel-based Shale Air Emissions Data Management System is being developed and the publicly-available Oil and Gas Reporting Electronic (OGRE) System will be modified to accommodate the reporting of this information. Training is expected to be offered by PADEP in February 2012. Additional materials can be found on PADEP’s website here. Industry representatives are hopeful that an extension will be granted for delivery of the first reports.

2) General Permit GP-5 – Natural Gas Production Facilities

Use of GP-5 expedites the permitting of certain natural gas activities. The permit was last updated on 3/17/11 although no changes were made to the applicability of the permit or the associated emission limits. The main change to the permit was a new condition that allows the applicant to limit the maximum emissions (i.e., potential to emit) of a source. The biggest changes though were to the application itself which expanded from two pages to nine. The new application requires significantly more detail including serial numbers for equipment, design parameters for control devices, and compliance demonstration methods. With the development of EPA’s new NSPS and NESHAPS (see Item 6 below), PADEP plans to issue more substantive changes to GP-5 in early 2012. Watch for the opportunity to submit comments during another 45-day window when proposed modifications are published.

3) General Permit GP-11 – Nonroad Engines

Proposed changes to GP-11 were published in the PA Bulletin on 10/30/10. PADEP included a provision to operate engines at temporary locations provided written notification is made to the municipality and PADEP five days prior to the change in location. PADEP also proposed to require that an operations report be submitted within 30 days of completing work at each temporary location. PADEP received comments from 1,122 parties prior to the comment period that closed on 5/26/11 and PADEP is still in the process of developing a comment and response document. Possible changes to GP-11 are closely tied to proposed revisions to Exemption #38 on the PADEP Plan Approval Exemption List.

4) Plan Approval Exemption #38

Certain oil and gas exploration and production facilities were exempt from Plan Approval requirements under Exemption #38 of the 7/26/03 list of Plan Approval exemptions. A draft revision to that list was published on 4/16/10 which included the addition of several caveats to Exemption #38 that make it more difficult to obtain the exemption. The public comment period closed on 5/26/11 by which time the agency had received comments on Exemption #38 from 1,225 parties. Industry advocates are hopeful that the exemption will be tailored to enable nonroad engines that would otherwise be subject to GP-11 to be exempt from permitting requirements altogether. PADEP is considering its response to these comments in combination with its work on GP-11.

5) Source Aggregation Guidance

PADEP published its final Guidance for Performing Single Stationary Source Determinations for Oil and Gas Industrieson10/22/11 (41 Pa.B. 5719). The comment period for that guidance closed on 11/21/11. PADEP is in the process of responding to comments from 364 parties, perhaps most notable among them being Diana Esher, U.S. EPA Region III Air Protection Division Director. Ms. Esher stated that, “We disagree with the policy pronouncements in the PADEP guidance which differ from established federal law and the Commonwealth’s own State Implementation Plan (SIP) and regulations by attempting to emphasize proximity and ‘common sense notion of a plant’ above other factors including conducting case-by-case analysis.” Through six pages of detailed comments, EPA delineates multiple disagreements with PADEP’s guidance. Ms. Esher states that PADEP indicates an intent “…to change the manner in which regulations that have been adopted as part of the…SIP and that are now federal law will be implemented.” Ms. Esher states that “this is problematic,” in that the SIP becomes federal law once approved by EPA, not state law. In concluding, Ms. Esher was clear that EPA will be paying close attention to PADEP’s source aggregation determinations.

6) NSPS/NESHAPS

Proposed air emission standards for the oil and natural gas industry were published in the Federal Register on 8/23/11. As drafted, these rules will apply to production and processing (drilling and well completions following hydraulic fracturing, producing wells, gathering lines, gathering and boosting compressors, gas processing plants) and transmission and storage (transmission compressor stations, transmission pipeline, underground storage). Various industry groups including the American Petroleum Institute, the Gas Processors Association, and the Marcellus Shale Coalition submitted comments prior to the close of the comment period in late November 2011. Final rules, expected by 2/28/12, will be automatically adopted in their entirety in the Pennsylvania Code.

7) 40 CFR 98, Subpart W Greenhouse Gas Reporting

Subpart W was published at the end of 2010 and obliged affected facilities to begin gathering data in 2011 for initial GHG reports due in 2012 (see CEC’s prior blog posting). The Subpart has gone through several modifications since it was originally published, the most significant of which was an allowance for the use of best available monitoring methods (BAMM) for all of 2011. Use of BAMM is currently permitted through June of 2012 providing the designated representative e-filed a Notice of Intent prior to 1/3/12. Affected parties are encouraged to monitor changes in the rule for revisions to emission estimation methodologies and other technical revisions. The current due date for the 2011 reports is 9/28/12.

CEC will be following these topics and will provide periodic updates as they develop. In the meantime, if you are unclear as to how any of these issues may affect your operations, please contact CEC’s natural gas air quality expert Kris Macoskey at 800-365-2343 or by email at kmacoskey@cecinc.com.